The past few years have seen asset managers respond to uncertain markets, shifting demographics and regulatory change with a raft of more outcome-focused, multi-asset investment options. Is the sun setting on the traditional, mixed asset approach?

As a growing organisation NEST are constantly evolving their approach and look to understand how best to service their members. This report details a variety of case studies which demonstrate positive and responsible investments, with a look to future developments within the DC landscape.

BWD Rensburg to narrow holdings

By Leo Bland BWD Rensburg is looking to cut the number of holdings in its corporate bond unit trust...

By Leo Bland

BWD Rensburg is looking to cut the number of holdings in its corporate bond unit trust by up to a third by the end of the year.

John Anderson, who manages BWD Corporate Bond, has roughly 60 holdings, but is looking to reduce this to between 40 and 50 during 2001.

The yield on the portfolio is roughly 4.75% after charges have been taken.

Anderson said: "We are not looking to take large amounts of risk and will not tend to go below BBB-plus in terms of the credit ratings of holdings. The fund had about 70 holdings when I took it over last year, and we are managing it towards the quality end of the market.

"I thought the number of holdings was on the high side for a fixed interest fund, so I have since reduced it to about 60. In terms of the time scale for reducing the number of stocks in the portfolio further, I do not believe in selling out of holdings for the sake of it, and it will take some time as the corporate bond market is quite illiquid at the moment."

Anderson is favouring utilities issues because he believes these should hold up well during the expected economic slowdown in the UK.

He holds corporate bonds from energy distribution firm TransCo, as well as debt from British Airports Authority, which are both offering yields in excess of 6%.

Anderson is also keen on the retailing sector, where he has exposure to bond issues from Tesco and John Lewis, where the yield is about 6%.

He added: "One of the reasons we have chosen to focus on the quality end of the corporate bond market is that we believe that the number of defaults is going to rise quite substantially this year.

"Companies are already seeing this in the US on the back of the economic slowdown occurring there. That is a good reason for concentrating on companies with decent credit ratings."

Anderson believes that there could well be a short, sharp recession in the UK economy this year.

He said: We have to be concerned about the US as well and have to work out how much a US downturn would affect us.

"In terms of putting the portfolio together, I look at sector breakdown and do not want to get over-exposed to one sector.

"I am keen on financials issues where we are overweight as in a falling interest rate environment these companies will tend to do well."

BWD Corporate Bond is ranked 28 out of 59 funds in the UK Corporate Bond sector over three years, offer to bid, on growth of 14.4%.

The unit trust is 37 out of 76 over one year on growth of 5% on an offer to bid basis and is 77 out of 82 over three months on growth of 1.7% on a bid to bid basis.